Diebold v Northern Trust Investments Class Action

United States District Court for the Northern District of Illinois

Case No. 09-cv-1934

Case Overview

Plaintiffs in Diebold v. Northern Trust Investments, N.A. are participants in retirement plans who allege that Northern Trust breached its fiduciary duties to investors when it imprudently structured and managed its securities lending program. Through its securities lending program, Northern Trust loaned securities that were owned by its clients to third party borrowers in exchange for cash collateral. This collateral was to be invested in conservative and liquid investments. Instead, Plaintiffs allege that Northern Trust invested the collateral in long term debt, residential mortgage-backed securities, SIVs, and other risky and illiquid assets. Plaintiffs allege that Northern Trust’s imprudent management of the collateral pools caused Plaintiffs and their retirement plans to suffer substantial losses.

Plaintiffs allege that the Northern Trust Defendants breached their duties of prudence, loyalty, and exclusive purpose under the Employee Retirement Income Security Act of 1974 (as amended) (“ERISA”) by investing Plan assets recklessly and imprudently, by acting disloyally, and by causing losses to the Plans.

On December 3, 2009, Plaintiffs filed their Amended Class Action Complaint. On September 7, 2010, The Honorable Judge Hibbler ordered the Defendants Motion to Dismiss to be granted in part and denied in part. Defendants answered the Complaint on November 29, 2010. On February 27, 2012, Plaintiffs filed their Motion for Class Certification. On March 17, 2015, the Court preliminarily approved settlement of this case. On August 10, 2015, the Court granted final approval of the Class Action Settlement finding that Settlement was fair, reasonable and adequate, and in the best interests of Settling Plaintiffs and the Settlement Class.

Settlement Class

All entities that are governed by ERISA and that participated in Indirect Lending during the Settlement Class Period (i.e., the period beginning January 1, 2007 through and including October 31, 2010) and are alleged to have been damaged as a result of their participation in Indirect Lending at issue in the action.

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